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Each depositor insured to at least $250,000 per insured bank

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4000 - Advisory Opinions

Affiliation by Virtue of Common Ownership--Tracing Beneficial Ownership Through a Bank Holding Company


May 25, 1983

Pamela E. F. LeCren, Senior Attorney

The following is in response to your request for an opinion on the interpretation of section 3201(3)(B) of the Depository Institution Management Interlocks Act (12 U.S.C. § 3201(3)(B)). That section provides that, for the purposes of the Interlocks Act, an affiliation can arise where more than 50% of the voting stock of two corporations is owned in the aggregate by the same person or group of persons. This agency has at least on one other occasion issued an opinion indicating that beneficial ownership for the purposes of the Interlocks Act can be traced through a holding company structure. Thus, in a case in which an individual owns 100% of a holding company that in turn owns 75% of a subsidiary bank, the individual can be said to beneficially own more than 50% of the voting stock of the underlying bank.

The beneficial ownership is "traced through", however, on a pro rata basis. Depending on the percentage of stock ownership, an affiliation by common ownership may not arise even when tracing through. We cannot therefore, give you a final determination with regard to the fact situation presented in your letter as you merely indicated that individual X owns more than 50% of a bank holding company which in turn owns more than 50% of an underlying bank.

We are providing you with a copy of an opinion issued with regard to a similar situation to the one presented in your letter. The facts presented to us in that request for an opinion involved an individual and members of his family which controlled two separate bank holding companies that in turn each held an underlying bank. We hope this letter in conjunction with our previous opinion letter will be of help in responding to your question. Should you wish further information, please feel free to contact me.

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